If you were to ask somebody for the main cause of stress in their life, chances are they would utter the word ‘money.’ Why? There are a number of reasons.
We live in a world where we are constantly having to work hard to achieve a regular income, and in our relentless pursuit to stay afloat financially, we can tire ourselves out and feel the effects of stress on our lives.
Another reason behind financial stress is debt, or the threat of debt if we don’t find ways to build an income.
And then there’s the worry about the future, especially for business owners who have to be proactive to ensure income doesn’t dry up. Without that constant flow of money coming into the business, the financial lives of the business owners and his employees will be at stake, as well as the overall state of the business.
Money then; it’s great when we have plenty of it, it’s not so great when we don’t. Financial stress can ensue, you will understand this if you have ever had a cash flow problem within your personal or your business life.
Thankfully, we can avoid financial stress; to a degree, at least. The points we will be making in this article relate to the world of business, although you may be able to apply them to your personal life as well.
Here then are some of the ways you can avoid financial stress within your business.
#1: When it comes to managing your finances, don’t go it alone
If your skills with finances, from budgeting to calculating your taxes, are borderline incompetent, then you definitely shouldn’t manage your finances alone. You should seek the help of an accountant, bookkeeper, or a qualified member of staff to manage the financial side of your business. Of course there is the likes of Chaser, Credit Control Automation for Xero, QBO and Sage, to make things a little easier for businesses, so keep this in mind.
However, even if you have competence within this side of your business, you should still seek the support of another, because due to your busy role as a business owner, you might still make mistakes if you don’t have sufficient time to concentrate on this one area. A financial professional will help you make financial goals, advise you on any money matters that you don’t understand, and will manage those tasks, such as the aforementioned taxes, where mistakes shouldn’t be made. And by having that trained person to help you, you will be less to prone to stress because you will have that peace of mind that comes with knowing you’re not handling this side of your business alone.
#2: Budget for all aspects of your business
To ensure your business runs like clockwork without any failing parts, you need to manage your finances to prepare for the expected costs of each facet of your operation. In one of our previous articles, we listed some of the costs you need to prepare for, and these include your employees, your marketing, and any equipment your business needs. If you don’t have sufficient money to channel into any of these areas, you are going to run into problems. Money management is key, therefore, as you need to have reserves to partition into the relevant areas. As we suggested above, you might seek the help of a professional to ensure you don’t run the risk of falling financially short in any essential area of your business.
#3: Don’t take out a loan you can’t afford to pay back
Our first piece of advice would be this: try and find other ways to fund your business before taking out a loan. If you need capital to start your business, you might start to save money well in advance to reduce the need for a loan, or you might attract financial investors to your cause. However, if you do need a loan, and speaking realistically, many business owners do at some point with the lives of their business, then do your research before signing on any dotted lines. Talk to all of the banks within your area, and compare at Guarantorloans.com and other such credit brokers, and then sign up to the fairest loan you can find. You need to remember that a default on a loan payment could reduce your credit score and lead you into deeper debt, so it’s important to do the sums before signing up to ensure you have the funds to make the necessary repayments.
#4: Be frugal in all aspects of your business
Finding ways to reduce your expenses should be a no-brainer within your business. This will give you the means to splash out more cash on the things that matter, such as vital equipment your business needs and on your marketing efforts. Reducing your expenses also means you will have more money to put into your savings and emergency funds, meaning you won’t have to dig yourself out of a jam with yet another loan if you run into any problems down the line, such as having to pay for the repairs or replacement of a malfunctioning piece of equipment. There are some tips to being a frugal business owner here, so have a read of the article, and then apply the suggestions within your operation. You will save yourself a lot of financial headaches in the future if you do.
#5: Keep on top of your invoicing
Especially when money is tight, you might hit financial trouble if you don’t receive the money you are owed after providing a service to somebody. While it’s rare that clients won’t pay, you might still get the occasional late-paying client, and if this money is to go towards your bills or staff wages, for example, then you might have to face the consequences. Therefore, as soon as you have completed work for a client, invoice them. And then set them a parameter as to when you expect to be paid; within 7 days is usually a reasonable request. Send them a gentle reminder with a phone call or an email, or use billing and invoicing software with automatic reminders. When the money comes into your account, you will then be able to keep your utility companies and employees happy, without the aggro that would otherwise ensue if you weren’t able to make those vital payments.
#6: Keep track of all of your expenses
And when we say ‘all of your expenses,’ we do mean all of them. No matter how small the expense, you should still save the receipt. Those little expenses add up, so it’s important to know where your money is going each month. You can then make adjustments to the way you manage your money, so if you ever hit a point where money is particularly tight, you can easily check your expense records, and make the necessary cutbacks and changes to ensure you don’t run into any further financial issues down the line. Your accountant or financial whizkid of a staff member will work with you on this ongoing task, but if you are going it alone, you might want to make your life easier by downloading expense tracking software to manage this area of your business.
#7: Look after number one
And by number one, we are, of course, talking about you! Especially when running a small business on your own, or with very few members of staff, your business might ultimately suffer if you were forced out of action for a while. Taking care of yourself is a must then, so look after your health. This means getting enough rest at home, eating well, and not working yourself to the bone during the day. Many small business owners outsource certain tasks to alleviate the pressure of a busy workload, so consider the same if you don’t have people to delegate to within your place of business. When you’re fighting fit, you will be more productive, and your business will prosper. When you’re burned out with stress and exhaustion, the opposite might be true. Be mindful then, for the sake of both your personal and your business health.
#8: Look after number two
By which we mean your business! While your health should always come first, you should then look after the health of your business. This means doing what needs to be done to ensure it goes from strength to strength. So, you should improve your marketing efforts, research your competitors, find ways to ensure customer loyalty, and deliver an excellent product or service. The more work you put in (without burning yourself out), the better your business will be. As a consequence, you will face less financial stress because like you, your business should be in excellent health.
We aren’t suggesting you will never experience financial stress in your business, but you can reduce the chances by following the tips we have given you within this article. We hope they have been useful to you, but let us know your thoughts. And if you have any further tips for our readers, please do the honourable thing, and share your wisdom with us! For example, did you know having an emotional support animal can help relieve stress?